IMO 2020 market transition under way: IBIA

The market transition to low-sulphur bunker fuels is under way with an increasing number of ports offering new low-sulphur grades following a recent uptick in demand, the International Bunker Industry Association (IBIA) said.

Speaking at the International Maritime Organisation (IMO) sulphur cap symposium today, the IBIA's Unni Einemo said shipowner demand for IMO-compliant grades with less than 0.5pc sulphur has been limited to smaller quantities for trials and testing since early 2019. Some of this had been supplied under non-disclosure agreements (NDAs) to maintain suppliers' commercial advantage.

But, more suppliers across more ports have started to offer IMO-compliant grades, especially since September. Demand for 0.5pc sulphur fuel oil has been increasing rapidly since mid-September, albeit with regional variations.

IBIA said IMO-compliant fuel is increasingly selling in Singapore and Fujairah, the two biggest bunkering ports, and at smaller ports in China, Japan, South Korea, Columbia and Brazil. In northwest Europe, 0.5pc fuel oil is available in the Amsterdam-Rotterdam-Antwerp (ARA) hub, at Skaw in Denmark, at Gothenburg in Sweden, at Hamburg in Germany, in the Baltic Sea and at English Channel ports. In southern Europe, Las Palmas, Algeciras and Barcelona in Spain, Gibraltar and Malta, some Italian ports, Istanbul and Novorossiysk have grades.

The IBIA expects other large European ports such as Piraeus and Kali Limenes in Greece and Genoa, Italy to follow suit later this month and in November.

Most regions have 0.5pc fuel oil on offer in at least some ports, IBIA said, and 0.1pc sulphur marine gasoil (MGO) is available almost everywhere. Supply of 0.5pc fuel oil is now outstripping demand in many locations, Einemo said, although some shipowners are postponing their initial switch-over from October into November and December.

Between 5-15pc of marine fuel demand is now for 0.5pc sulphur product in certain ports, including around 5pc in Singapore, according to IBIA. A 2018 IBIA sample testing found that only 2pc of 122mn t of marine fuel would have met the 0.5pc sulphur limit.

IBIA expects high-sulphur fuel oil (HSFO) supply to continue in major ports, but said a few locations will have limited to no availability. The product is still in high demand — HSFO can only be burnt on ships with exhaust scrubbers fitted after 1 January — but refiners and suppliers are reluctant to produce and blend too much of it in fear that it will lose value before it can be sold. HSFO stocks are running low, with several large bunkering ports reporting limited availability in the past two months, including in ARA and in Singapore.